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Summit Financial Group Reports Third Quarter 2014 Results

MOOREFIELD, W.Va., Oct. 29, 2014 (GLOBE NEWSWIRE) -- Summit Financial Group, Inc. ("Company" or "Summit") (Nasdaq:SMMF) today reported third quarter 2014 net income applicable to common shares of $3.14 million, or $0.35 per diluted share, compared to $2.08 million, or $0.24 per diluted share, for the third quarter of 2013, representing an increase of 51.3 percent, or 45.8 percent per diluted share. Q3 2014 earnings compared to Q3 2013 were positively impacted by a $1.54 million increase in net interest income and a $750,000 decline in provision for loan losses, but were negatively impacted by a $926,000 increase in write-downs of foreclosed properties.

Excluding from third quarter 2014 (on a pre-tax basis) realized securities gains of $128,000, losses on sales of foreclosed properties of $70,000, and write-downs of foreclosed properties of $1.58 million, Q3 2014 core earnings approximated $4.10 million, or $0.45 per diluted share. Excluding from Q3 2013 (on a pre-tax basis) realized securities gains of $132,000, gains on sales of foreclosed properties of $17,000, OTTI charges of $38,000 and write-downs of foreclosed properties of $654,000, Q3 2013 core earnings approximated $2.42 million, or $0.27 per diluted share.

For the nine months ended September 30, 2014, Summit recorded net income applicable to common shares of $7.58 million, or $0.85 per diluted share, compared with $4.70 million, or $0.55 per diluted share, for the comparable 2013 nine-month period, representing an increase of 61.2%, or 54.5% per diluted share.

Excluding from the nine month period ended September 30, 2014 nonrecurring items (on a pre-tax basis) comprised of realized securities gains of $64,000, losses on sales of foreclosed properties of $199,000, OTTI charges of $1,000 and write-downs of foreclosed properties of $3.47 million, and from the 2013 first nine-month period realized securities gains of $116,000, losses on sale of foreclosed properties of $546,000, OTTI charges of $118,000 and write-downs of foreclosed properties of $3.08 million, core earnings for first nine months of 2014 were approximately $9.85 million, or $1.08 per diluted share, compared to $6.98 million, or $0.79 per diluted share, for the 2013 nine month period.

Highlights for Q3 2014 include:

  • Nonperforming assets declined for the eleventh consecutive quarter, reaching its lowest level since Q4 2008; foreclosed properties are at the lowest level since Q4 2009.
  • Net interest margin increased 15 basis points compared to the linked quarter and 32 basis points since Q3 2013.
  • Achieved loan growth of $54.7 million, or 5.8 percent (non-annualized) during the first nine months of 2014.
  • Core revenues increased for the fifth consecutive quarter.
  • Recorded charges of $1.58 million to write-down foreclosed properties compared to $962,000 in Q2 2014 and $654,000 million in Q3 2013.
  • Core noninterest expenses remained relatively unchanged compared to Q3 2013.
  • Summit's regulatory capital ratios are at the highest levels in fourteen years.

H. Charles Maddy III, President and Chief Executive Officer of Summit, commented, "We are very pleased to report another quarter of solid performance improvements. We continued to enhance earnings, grow the loan portfolio, increase revenues, enhance net interest earnings, strengthen capital and reduce the portfolio of problem assets."

Results from Operations

Total revenue for third quarter 2014, consisting of net interest income and noninterest income, grew 12.8 percent to $14.0 million compared to $12.4 million for the third quarter 2013. For the year-to-date period ended September 30, 2014, total revenue was $39.8 million compared to $37.1 million for the same period of 2013, representing a 7.3 percent increase.

Total core revenue (excluding nonrecurring items, enumerated above) was $13.9 million for third quarter 2014 compared to $12.3 million for the same prior-year quarter, an increase of 12.6 percent. For the first nine months of 2014, total core revenue (excluding nonrecurring items) was $39.8 million compared to $37.1 million for the first nine months of 2013, a 7.2 percent improvement.

For the third quarter of 2014, net interest income was $11.1 million, an increase of 16.1 percent from the $9.5 million reported in the prior-year third quarter and increased $757,000 compared to the linked quarter. The net interest margin for third quarter 2014 was 3.47 percent compared to 3.15 percent for the year-ago quarter, and 3.32 percent for the linked quarter.

Noninterest income, consisting primarily of insurance commissions from Summit's insurance agency subsidiary and service fee income from community banking activities, for third quarter 2014 was $2.91 million compared to $2.86 million for the comparable period of 2014. Excluding realized securities gains/losses and OTTI of securities, noninterest income was $2.79 million for third quarter 2014, compared to $2.77 million reported for third quarter 2013.

The third quarter 2014 provision for loan losses was $250,000, compared to $1.0 million for the linked quarter and the year-ago quarter.

Core noninterest expense continues to be well-controlled. Total noninterest expense increased 11.6% to $9.19 million compared to $8.23 million for the prior-year third quarter. Excluding from noninterest expense (on a pre-tax basis) losses on sales of foreclosed properties of $70,000 in Q3 2014 and gains of $17,000 in Q3 2013 and write-downs of foreclosed properties of $1.58 million in Q3 2014 and $654,000 in Q3 2013, noninterest expense would have approximated $7.54 million for Q3 2014 compared to $7.59 million for the comparable period of 2013. Noninterest expense for the first nine months of 2014 decreased 0.5% compared to the first nine months of 2013.

Balance Sheet

At September 30, 2014, total assets were $1.43 billion, an increase of $42.4 million, or 3.1 percent since December 31, 2013. Total loans, net of unearned fees and allowance for loan losses, were $993.3 million at September 30, 2014, up $56.3 million, or 6.0 percent, from the $937.1 million reported at year-end 2013.

At September 30, 2014, deposits were $1.05 billion, an increase of $50.6 million, or 5.0 percent, since year end 2013. During first nine months of 2014, checking and savings grew by $20.2 million and $62.4 million, respectively, or 7.2 percent and 32.3 percent, respectively. Long-term borrowings and subordinated debentures declined by 42.5 percent since year end 2013, as the Company paid down $85.1 million in maturing borrowings, which was funded by growth in checking and savings deposits and short-term borrowings.

Asset Quality

As of September 30, 2014, nonperforming assets ("NPAs"), consisting of nonperforming loans, foreclosed properties, and repossessed assets, were $58.5 million, or 4.10 percent of assets. This compares to $63.0 million, or 4.39 percent of assets at the linked quarter, and $77.1 million, or 5.55 percent of assets, at third quarter 2013.

Third quarter 2014 net loan charge-offs were $215,000, or 0.09 percent of average loans annualized; while adding $250,000 to the allowance for loan losses. The allowance for loan losses stood at $11.0 million, or 1.10 percent of total loans at September 30, 2014, compared to 1.33 percent at year-end 2013.

Capital Adequacy

Shareholders' equity was $121.4 million as of September 30, 2014 compared to $111.1 million December 31, 2013 and $108.8 million at September 30, 2013. Tangible book value per common share increased to $11.81 at September 30, 2014 compared to $10.72 at December 31, 2013 and $10.48 at September 30, 2013.

Summit's depository institution, Summit Community Bank, Inc. (the "Bank"), is well in excess of regulatory requirements for a "well capitalized" institution at September 30, 2014. The Bank's total risk-based capital ratio was 15.5 percent at September 30, 2014 compared to 15.7 percent at December 31, 2013, while its Tier 1 leverage capital ratio improved to 10.5 percent from the 10.4 percent reported at December 31, 2013.

About the Company

Summit Financial Group, Inc. is a $1.43 billion financial holding company headquartered in Moorefield, West Virginia. Summit provides community banking services primarily in the Eastern Panhandle and South Central regions of West Virginia and the Northern and Shenandoah Valley regions of Virginia, through its bank subsidiary, Summit Community Bank, Inc., which operates fifteen banking locations. Summit also operates Summit Insurance Services, LLC in Moorefield, West Virginia and Leesburg, Virginia.

FORWARD-LOOKING STATEMENTS

This press release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Words such as "expects", "anticipates", "believes", "estimates" and other similar expressions or future or conditional verbs such as "will", "should", "would" and "could" are intended to identify such forward-looking statements.

Although we believe the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking laws and regulations; changes in tax laws; the impact of technological advances; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; and changes in the national and local economies. We undertake no obligation to revise these statements following the date of this press release.

NON-GAAP FINANCIAL MEASURES

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Specifically, Summit adjusted GAAP performance measures to exclude the effects of realized and unrealized securities gains and losses, gains/losses on sales of assets, and write-downs of foreclosed properties to estimated fair value included in its Statements of Income. Management deems believes presentations of financial measures excluding the impact of these items provide useful supplemental information that is important for a proper understanding of the operating results of Summit's core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q3 2014 vs Q3 2013
For the Quarter Ended Percent
Dollars in thousands 9/30/2014 9/30/2013 Change
Condensed Statements of Income
Interest income
Loans, including fees $ 13,033 $ 12,532 4.0%
Securities 1,724 1,512 14.0%
Other 3 1 200.0%
Total interest income 14,760 14,045 5.1%
Interest expense
Deposits 2,288 2,487 -8.0%
Borrowings 1,395 2,020 -30.9%
Total interest expense 3,683 4,507 -18.3%
Net interest income 11,077 9,538 16.1%
Provision for loan losses 250 1,000 -75.0%
Net interest income after provision for loan losses 10,827 8,538 26.8%
Noninterest income
Insurance commissions 1,105 1,057 4.5%
Service fees related to deposit accounts 1,177 1,106 6.4%
Realized securities gains (losses) 128 132 -3.0%
Other-than-temporary impairment of securities -- (38) -100.0%
Other income 503 606 -17.0%
Total noninterest income 2,913 2,863 1.7%
Noninterest expense
Salaries and employee benefits 4,026 4,050 -0.6%
Net occupancy expense 482 454 6.2%
Equipment expense 520 578 -10.0%
Professional fees 380 263 44.5%
FDIC premiums 480 503 -4.6%
Foreclosed properties expense 298 262 13.7%
Loss (gain) on sales of foreclosed properties 70 (17) -511.8%
Write-downs of foreclosed properties 1,580 654 141.6%
Other expenses 1,350 1,484 -9.0%
Total noninterest expense 9,186 8,231 11.6%
Income before income taxes 4,554 3,170 43.7%
Income taxes 1,218 898 35.6%
Net income 3,336 2,272 46.8%
Preferred stock dividends 193 194 -0.5%
Net income applicable to common shares $ 3,143 $ 2,078 51.3%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Quarterly Performance Summary -- Q3 2014 vs Q3 2013
For the Quarter Ended Percent
9/30/2014 9/30/2013 Change
Per Share Data
Earnings per common share
Basic $ 0.42 $ 0.28 50.0%
Diluted $ 0.35 $ 0.24 45.8%
Average shares outstanding
Basic 7,457,222 7,443,865 0.2%
Diluted 9,630,293 9,621,957 0.1%
Performance Ratios
Return on average equity (A) 11.13% 8.49% 31.1%
Return on average assets 0.93% 0.67% 38.8%
Net interest margin 3.47% 3.15% 10.2%
Efficiency ratio (B) 51.19% 56.22% -8.9%

NOTE (A) – Net income divided by total shareholders' equity.

NOTE (B) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Nine Month Performance Summary -- 2014 vs 2013
For the Nine Months Ended Percent
Dollars in thousands 9/30/2014 9/30/2013 Change
Condensed Statements of Income
Interest income
Loans, including fees $ 37,764 $ 38,234 -1.2%
Securities 5,403 4,684 15.4%
Other 7 4 75.0%
Total interest income 43,174 42,922 0.6%
Interest expense
Deposits 6,864 8,074 -15.0%
Borrowings 4,875 6,047 -19.4%
Total interest expense 11,739 14,121 -16.9%
Net interest income 31,435 28,801 9.1%
Provision for loan losses 2,250 3,500 -35.7%
Net interest income after provision for loan losses 29,185 25,301 15.4%
Noninterest income
Insurance commissions 3,377 3,373 0.1%
Service fees related to deposit accounts 3,291 3,202 2.8%
Realized securities gains 64 116 -44.8%
Other-than-temporary impairment of securities (1) (118) -99.2%
Other income 1,670 1,741 -4.1%
Total noninterest income 8,401 8,314 1.0%
Noninterest expense
Salaries and employee benefits 12,052 12,155 -0.8%
Net occupancy expense 1,528 1,387 10.2%
Equipment expense 1,599 1,724 -7.3%
Professional fees 978 885 10.5%
FDIC premiums 1,477 1,557 -5.1%
Foreclosed properties expense 780 836 -6.7%
Loss (gain) on sales of foreclosed properties 198 546 -63.7%
Write-downs of foreclosed properties 3,471 3,078 12.8%
Other expenses 4,130 4,164 -0.8%
Total noninterest expense 26,213 26,332 -0.5%
Income before income taxes 11,373 7,283 56.2%
Income taxes 3,215 2,001 60.7%
Net income 8,158 5,282 54.4%
Preferred stock dividends 580 582 -0.3%
Net income applicable to common shares $ 7,578 $ 4,700 61.2%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Nine Month Performance Summary -- 2014 vs 2013
For the Nine Months Ended Percent
9/30/2014 9/30/2013 Change
Per Share Data
Earnings per common share
Basic $ 1.02 $ 0.63 61.9%
Diluted $ 0.85 $ 0.55 54.5%
Average shares outstanding
Basic 7,455,952 7,438,216 0.2%
Diluted 9,626,942 9,618,328 0.1%
Performance Ratios
Return on average equity (A) 9.35% 6.46% 44.7%
Return on average assets 0.77% 0.51% 51.0%
Net interest margin 3.37% 3.17% 6.3%
Efficiency ratio (B) 52.69% 56.24% -6.3%

NOTE (A) – Net income divided by total average shareholders' equity.

NOTE (B) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
For the Quarter Ended
Dollars in thousands 9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013
Condensed Statements of Income
Interest income
Loans, including fees $ 13,033 $ 12,515 $ 12,216 $ 12,507 $ 12,532
Securities 1,724 1,827 1,852 1,850 1,512
Other 3 2 2 2 1
Total interest income 14,760 14,344 14,070 14,359 14,045
Interest expense
Deposits 2,288 2,335 2,241 2,317 2,487
Borrowings 1,395 1,689 1,791 2,039 2,020
Total interest expense 3,683 4,024 4,032 4,356 4,507
Net interest income 11,077 10,320 10,038 10,003 9,538
Provision for loan losses 250 1,000 1,000 1,000 1,000
Net interest income after provision for loan losses 10,827 9,320 9,038 9,003 8,538
Noninterest income
Insurance commissions 1,105 1,091 1,181 1,056 1,057
Service fees related to deposit accounts 1,177 1,101 1,043 1,124 1,106
Realized securities gains (losses) 128 (43) (22) 124 132
Other-than-temporary impairment of securities -- (1) -- -- (38)
Other income 503 557 581 592 606
Total noninterest income 2,913 2,705 2,783 2,896 2,863
Noninterest expense
Salaries and employee benefits 4,026 4,045 3,980 4,024 4,050
Net occupancy expense 482 505 541 466 454
Equipment expense 520 513 566 580 578
Professional fees 380 282 316 295 263
FDIC premiums 480 495 502 502 503
Foreclosed properties expense 298 229 254 209 262
Loss (gain) on sale of foreclosed properties 70 54 75 (28) (17)
Write-downs of foreclosed properties 1,580 962 928 644 654
Other expenses 1,350 1,445 1,336 1,732 1,484
Total noninterest expense 9,186 8,530 8,498 8,424 8,231
Income before income taxes 4,554 3,495 3,323 3,475 3,170
Income taxes 1,218 1,063 934 687 898
Net income 3,336 2,432 2,389 2,788 2,272
Preferred stock dividends 193 193 193 194 194
Net income applicable to common shares $ 3,143 $ 2,239 $ 2,196 $ 2,594 $ 2,078
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Five Quarter Performance Summary
For the Quarter Ended
9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013
Per Share Data
Earnings per common share
Basic $ 0.42 $ 0.30 $ 0.29 $ 0.35 $ 0.28
Diluted $ 0.35 $ 0.25 $ 0.25 $ 0.29 $ 0.24
Average shares outstanding
Basic 7,457,222 7,457,222 7,453,370 7,450,379 7,443,865
Diluted 9,630,293 9,630,699 9,628,927 9,624,312 9,621,957
Performance Ratios
Return on average equity (A) 11.13% 8.37% 8.46% 10.15% 8.49%
Return on average assets 0.93% 0.69% 0.69% 0.80% 0.67%
Net interest margin 3.47% 3.32% 3.33% 3.24% 3.15%
Efficiency ratio - (B) 51.19% 52.86% 54.13% 57.31% 56.22%

NOTE (A) – Net income divided by average total shareholders' equity.

NOTE (B) – Computed on a tax equivalent basis excluding nonrecurring income and expense items and amortization of intangibles.

SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Selected Balance Sheet Data
For the Quarter Ended
Dollars in thousands, except per share amounts 9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013
Assets
Cash and due from banks $ 3,933 $ 3,749 $ 3,827 $ 3,442 $ 4,571
Interest bearing deposits other banks 9,300 9,970 13,424 8,340 11,532
Securities 282,401 287,883 281,865 288,780 291,258
Loans, net 993,347 992,816 962,714 937,070 939,169
Property held for sale 47,252 48,783 52,241 53,392 45,303
Premises and equipment, net 20,132 20,301 20,457 20,623 20,780
Intangible assets 7,748 7,798 7,861 7,949 8,036
Cash surrender value of life insurance policies 36,417 36,151 35,881 35,611 35,257
Other assets 28,139 28,507 27,847 31,020 31,881
Total assets $ 1,428,669 $ 1,435,958 $ 1,406,117 $ 1,386,227 $ 1,387,787
Liabilities and Shareholders' Equity
Deposits $ 1,054,454 $ 1,057,795 $ 1,052,630 $ 1,003,812 $ 1,016,735
Short-term borrowings 127,432 91,729 68,974 62,769 54,163
Long-term borrowings and subordinated debentures 114,855 158,331 159,881 199,905 199,929
Other liabilities 10,566 10,638 10,105 8,669 8,155
Shareholders' equity 121,362 117,465 114,527 111,072 108,805
Total liabilities and shareholders' equity $ 1,428,669 $ 1,435,958 $ 1,406,117 $ 1,386,227 $ 1,387,787
Book value per common share (A) $ 12.62 $ 12.21 $ 11.91 $ 11.55 $ 11.32
Tangible book value per common share (A) $ 11.81 $ 11.40 $ 11.09 $ 10.72 $ 10.48
Tangible equity / Tangible assets 8.0% 7.7% 7.6% 7.5% 7.3%

NOTE (A) – Assumes conversion of convertible preferred stock

SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Regulatory Capital Ratios
9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013
Summit Financial Group, Inc.
Total Risk Based Capital 14.3% 14.2% 14.2% 14.5% 14.5%
Tier 1 Risk-based Capital 12.5% 12.4% 12.4% 12.4% 12.1%
Tier 1 Leverage Ratio 9.2% 9.0% 9.0% 8.9% 8.9%
Summit Community Bank, Inc.
Total Risk Based Capital 15.5% 15.6% 15.6% 15.7% 15.5%
Tier 1 Risk-based Capital 14.4% 14.5% 14.5% 14.5% 14.3%
Tier 1 Leverage Ratio 10.5% 10.6% 10.6% 10.4% 10.4%
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Loan Composition
Dollars in thousands 9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013
Commercial $ 83,762 $ 90,096 $ 93,517 $ 88,352 $ 83,844
Commercial real estate
Owner occupied 156,765 154,260 150,025 149,618 151,261
Non-owner occupied 314,577 314,439 297,197 280,790 279,412
Construction and development
Land and development 61,088 64,246 67,342 71,453 73,089
Construction 27,239 20,902 18,327 15,155 12,323
Residential real estate
Non-jumbo 218,125 219,569 215,665 212,946 215,058
Jumbo 51,917 52,487 51,406 53,406 59,701
Home equity 64,256 61,248 56,161 54,844 53,674
Consumer 19,906 19,777 19,106 19,889 20,472
Other 6,753 6,798 5,037 3,276 3,374
Total loans, net of unearned fees 1,004,388 1,003,822 973,783 949,729 952,208
Less allowance for loan losses 11,041 11,006 11,069 12,659 13,039
Loans, net $ 993,347 $ 992,816 $ 962,714 $ 937,070 $ 939,169
SUMMIT FINANCIAL GROUP INC. (NASDAQ: SMMF)
Deposit Composition
Dollars in thousands 9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013
Non interest bearing checking $ 104,442 $ 106,134 $ 99,445 $ 92,837 $ 99,109
Interest bearing checking 195,183 187,855 195,898 186,578 186,702
Savings 255,880 243,323 228,854 193,446 193,285
Time deposits 498,949 520,483 528,433 530,951 537,639
Total deposits $ 1,054,454 $ 1,057,795 $ 1,052,630 $ 1,003,812 $ 1,016,735
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Asset Quality Information
For the Quarter Ended
Dollars in thousands 9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013
Gross loan charge-offs $ 297 $ 1,312 $ 2,862 $ 1,669 $ 2,825
Gross loan recoveries (82) (249) (272) (289) (742)
Net loan charge-offs $ 215 $ 1,063 $ 2,590 $ 1,380 $ 2,083
Net loan charge-offs to average loans (annualized) 0.09% 0.43% 1.08% 0.58% 0.89%
Allowance for loan losses $ 11,041 $ 11,006 $ 11,069 $ 12,659 $ 13,039
Allowance for loan losses as a percentage of period end loans 1.10% 1.10% 1.14% 1.33% 1.37%
Nonperforming assets:
Nonperforming loans
Commercial $ 309 $ 415 $ 866 $ 1,224 $ 2,557
Commercial real estate 936 1,537 2,834 2,318 3,795
Commercial construction and development -- 3,601 3,653 3,782 3,761
Residential construction and development 4,592 5,248 6,599 9,048 9,128
Residential real estate 5,257 3,289 2,890 2,446 12,385
Consumer 146 129 73 128 145
Total nonperforming loans 11,240 14,219 16,915 18,946 31,771
Foreclosed properties
Commercial 110 110 -- -- --
Commercial real estate 5,815 5,762 8,523 9,903 9,961
Commercial construction and development 10,178 10,363 11,097 11,125 11,161
Residential construction and development 20,431 20,557 20,640 20,485 20,585
Residential real estate 10,718 11,991 11,981 11,879 3,596
Total foreclosed properties 47,252 48,783 52,241 53,392 45,303
Other repossessed assets 34 -- 28 8 --
Total nonperforming assets $ 58,526 $ 63,002 $ 69,184 $ 72,346 $ 77,074
Nonperforming loans to period end loans 1.12% 1.42% 1.74% 1.99% 3.34%
Nonperforming assets to period end assets 4.10% 4.39% 4.92% 5.22% 5.55%
Loans Past Due 30-89 Days
For the Quarter Ended
In thousands 9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013
Commercial $ 253 $ 376 $ 52 $ 74 $ 30
Commercial real estate 1,094 1,032 1,310 1,809 1,757
Construction and development 324 156 754 1,628 154
Residential real estate 5,087 5,775 3,847 4,332 4,697
Consumer 427 585 219 292 229
Other 18 -- -- -- 50
Total $ 7,203 $ 7,924 $ 6,182 $ 8,135 $ 6,917
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
Q3 2014 vs Q3 2013
Q3 2014 Q3 2013
Average Earnings / Yield / Average Earnings / Yield /
Dollars in thousands Balances Expense Rate Balances Expense Rate
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable $ 995,270 $ 12,944 5.22% $ 935,975 $ 12,468 5.28%
Tax-exempt 8,331 135 6.43% 5,258 95 7.17%
Securities
Taxable 208,891 1,084 2.06% 218,054 895 1.63%
Tax-exempt 83,956 970 4.58% 77,445 935 4.79%
Interest bearing deposits other banks and Federal funds sold 11,842 3 0.10% 7,081 1 0.06%
Total interest earning assets 1,308,290 15,136 4.59% 1,243,813 14,394 4.59%
Noninterest earning assets
Cash & due from banks 3,690 4,524
Premises & equipment 20,229 20,900
Other assets 112,103 109,219
Allowance for loan losses (11,272) (13,945)
Total assets $ 1,433,040 $ 1,364,511
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing demand deposits $ 191,565 $ 55 0.11% $ 183,042 $ 61 0.13%
Savings deposits 251,401 430 0.68% 194,810 278 0.57%
Time deposits 508,817 1,803 1.41% 543,552 2,147 1.57%
Short-term borrowings 123,495 98 0.31% 34,839 24 0.27%
Long-term borrowings and subordinated debentures 121,101 1,297 4.25% 199,940 1,996 3.96%
Total interest bearing liabilities 1,196,379 3,683 1.22% 1,156,183 4,506 1.55%
Noninterest bearing liabilities
Demand deposits 105,887 93,424
Other liabilities 10,857 7,831
Total liabilities 1,313,123 1,257,438
Shareholders' equity - preferred 9,283 9,309
Shareholders' equity - common 110,634 97,764
Total liabilities and shareholders' equity $ 1,433,040 $ 1,364,511
NET INTEREST EARNINGS $ 11,453 $ 9,888
NET INTEREST MARGIN 3.47% 3.15%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Average Balance Sheet, Interest Earnings & Expenses and Average Rates
YTD 2014 vs YTD 2013
YTD 2014 YTD 2013
Average Earnings / Yield / Average Earnings / Yield /
Dollars in thousands Balances Expense Rate Balances Expense Rate
ASSETS
Interest earning assets
Loans, net of unearned interest
Taxable $ 977,336 $ 37,516 5.13% $ 948,870 $ 38,038 5.36%
Tax-exempt 7,262 376 6.92% 5,560 298 7.17%
Securities
Taxable 213,089 3,565 2.24% 220,669 2,851 1.73%
Tax-exempt 80,814 2,785 4.61% 76,021 2,776 4.88%
Interest bearing deposits other banks and Federal funds sold 9,737 6 0.08% 7,706 4 0.07%
Total interest earning assets 1,288,238 44,248 4.59% 1,258,826 43,967 4.67%
Noninterest earning assets
Cash & due from banks 3,790 4,430
Premises & equipment 20,414 21,006
Other assets 114,203 111,948
Allowance for loan losses (11,887) (15,726)
Total assets $ 1,414,758 $ 1,380,484
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Interest bearing liabilities
Interest bearing demand deposits $ 189,581 $ 162 0.11% $ 178,911 $ 193 0.14%
Savings deposits 232,730 1,137 0.65% 195,907 875 0.60%
Time deposits 520,937 5,566 1.43% 566,172 7,007 1.65%
Short-term borrowings 92,963 209 0.30% 25,579 50 0.26%
Long-term borrowings and subordinated debentures 151,541 4,665 4.12% 203,019 5,997 3.95%
1,187,752 11,739 1.32% 1,169,588 14,122 1.61%
Noninterest bearing liabilities
Demand deposits 101,006 94,139
Other liabilities 9,609 7,698
Total liabilities 1,298,367 1,271,425
Shareholders' equity - preferred 9,286 9,319
Shareholders' equity - common 107,105 99,740
Total liabilities and shareholders' equity $ 1,414,758 $ 1,380,484
NET INTEREST EARNINGS $ 32,509 $ 29,845
NET INTEREST MARGIN 3.37% 3.17%
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
For the Quarter Ended For the Nine Months Ended
Dollars in thousands 9/30/2014 6/30/2014 9/30/2013 9/30/2014 9/30/2013
Core earnings applicable to common shares $ 4,102 $ 2,907 $ 2,420 $ 9,850 $ 6,984
Realized securities gains (losses) 128 (43) 132 64 116
Applicable income tax effect (47) 16 (49) (24) (43)
Gain (loss) on sale of foreclosed properties (70) (54) 17 (199) (546)
Applicable income tax effect 26 20 (6) 74 202
Other-than-temporary impairment of securities -- (1) (38) (1) (118)
Applicable income tax effect -- 0 14 0 44
Write-downs foreclosed properties (1,580) (962) (654) (3,471) (3,078)
Applicable income tax effect 585 356 242 1,284 1,139
(959) (668) (342) (2,272) (2,284)
GAAP net income applicable to common shares $ 3,143 $ 2,239 $ 2,078 $ 7,578 $ 4,700
Core diluted earnings per common share $ 0.45 $ 0.32 $ 0.27 $ 1.08 $ 0.79
Realized securities gains (losses) 0.01 -- 0.01 0.01 0.01
Applicable income tax effect -- -- -- -- --
Gain (loss) on sale of foreclosed properties (0.01) (0.01) -- (0.02) (0.06)
Applicable income tax effect -- -- -- 0.01 0.02
Other-than-temporary impairment of securities -- -- -- -- (0.01)
Applicable income tax effect -- -- -- -- --
Write-downs of foreclosed properties (0.16) (0.10) (0.07) (0.36) (0.32)
Applicable income tax effect 0.06 0.04 0.03 0.13 0.12
(0.10) (0.07) (0.03) (0.23) (0.24)
GAAP diluted earnings per common share $ 0.35 $ 0.25 $ 0.24 $ 0.85 $ 0.55
SUMMIT FINANCIAL GROUP, INC. (NASDAQ: SMMF)
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
For the Quarter Ended For the Nine Months Ended
Dollars in thousands 9/30/2014 6/30/2014 9/30/2013 9/30/2014 9/30/2013
Total core revenue $ 13,862 $ 13,069 $ 12,307 $ 39,773 $ 37,117
Realized securities gains/(losses) 128 (43) 132 64 116
Other-than-temporary impairment of securities -- (1) (38) (1) (118)
128 (44) 94 63 (2)
GAAP total revenue $ 13,990 $ 13,025 $ 12,401 $ 39,836 $ 37,115
Total core noninterest income $ 2,785 $ 2,749 $ 2,769 $ 8,338 $ 8,316
Realized securities gains/(losses) 128 (43) 132 64 116
Other-than-temporary impairment of securities -- (1) (38) (1) (118)
128 (44) 94 63 (2)
GAAP total noninterest income $ 2,913 $ 2,705 $ 2,863 $ 8,401 $ 8,314
Total core noninterest expense $ 7,535 $ 7,514 $ 7,594 $ 22,543 $ 22,708
(Gains)/losses on sales of foreclosed properties 70 54 (17) 199 546
Write-downs of foreclosed properties 1,580 962 654 3,471 3,078
1,650 1,016 637 3,670 3,624
GAAP total noninterest expense $ 9,185 $ 8,530 $ 8,231 $ 26,213 $ 26,332

CONTACT: Robert S. Tissue, Sr. Vice President & CFO Telephone: (304) 530-0552 Email: rtissue@summitfgi.com

Source:Summit Financial Group, Inc.